Canada Global (Web News) Wednesday’s decision by the Bank of Canada to maintain its benchmark interest rate was its first since more than a year of swift increases intended to contain inflation.
The policy rate of the central bank is at 4.5 percent.
The pause comes after eight straight rises saw the benchmark rate rise by 425 basis points since March 2 of last year, as was largely anticipated by economists. The central bank undertook one of the fastest rate tightening cycles in its history in hopes of tamping down rampant inflation.
The annual inflation rate in Canada has decreased from highs of 8.1% in mid-2022 to 5.9% as of January.
Although the labour market in Canada is still tight, the country’s economy has also shrunk dramatically.
After announcing a quarter-point increase in interest rates in January, the governors of the Bank of Canada said that the economy may be prepared for a “conditional pause” as the rate increases to this point take effect since it had achieved sufficient headway against inflation.
At the time, policymakers stated that in order to begin raising interest rates, they would need to see a “accumulation of evidence” showing inflation was not moving in the direction predicted.